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  Business   In Other News  16 Jun 2017  No interference will benefit Air India

No interference will benefit Air India

Published : Jun 16, 2017, 3:48 am IST
Updated : Jun 16, 2017, 3:48 am IST

Debt-ridden Air India needs to monetise its assets to reduce the burden.

However, a former executive director of Air India Jitender Bhargava said, “it should not be sold cheaply.”
 However, a former executive director of Air India Jitender Bhargava said, “it should not be sold cheaply.”

Mumbai: The proposal of the Niti Aayog to privatise Air India is being seriously considered by the government and a decision is likely to materialise in three months. NDA had in its earlier avatar in 1998 proposed privatisaion and Tata Singapore Airlines had made a bid but the whole process was derailed by vested interests.

This time with a more cohesive government and a strong Prime Minister the likelihood of it going through is bright. Besides, the carrier is surviving on regular funds infusion by the government, though these have not been forthcoming as proposed.

Privatistion therefore is the only alternative if the airline is to survive. If the government decides the alternative of getting a strategic investor it will have to give the investor full management control.

The government cannot afford to treat the airline as another PSU to be misused by some politicians, and have cells for sports, Hindi, vigilance and Parliamentary cells-all baggage that comes with government control.

The airline carries out the government’s agenda and one does not know if it is compensated for this adequately. For instance, it evacuates Indian citizens stranded during crises in West Asia, flies the Prime Minister, flies security personnel during elections and acts as a good stabiliser when some airlines try to take advantage and declare extortionist fares during crisis, as was the case during the Jat agitation.

However, a former executive director of Air India Jitender Bhargava said, “it should not be sold cheaply.”

Air India has huge assets that have never been computed. Besides its building at Nariman Point in South Mumbai, it has huge real estates, a $200 million engineering facility in Nagpur and highly profitable ventures in multiple forms like Air India Express and Air Alliance. It also has assets like bilaterals, parking slots, ground handling contracts etc. If these assets are monetised the revenue will take care of the employees.

Air India has enormous debts varying between Rs 50,000 to Rs 60,000 crore. Airlines are capital intensive. The turnaround plan envisaged infuse a total amount of Rs 30,231 crore upto 2021, as against which the Centre has released Rs 24,745.21 crore till date.

The point is whether AI can survive in its current avatar. The issue of ownership does not matter. For instance JRD Tata headed the airline and took it to glorious heights when Air India was government owned. The issue is of having a professional to run the airline. You cannot have some joint secretary who is a small time collector one day and is catapulted to chairmanship of an airline the next day. This is what has been happening at this star crossed carrier.

If the government decides to disinvest and get in a strategic partner, it will have to give up its say in appointments, and the application of PSU norms, and government rules and regulations and day to day interference.

If the government agrees to these conditions then it can be done under its ownership. Otherwise it should be fully privatised.

Tags: niti aayog, air india, tata singapore airlines
Location: India, Maharashtra, Mumbai (Bombay)